Premier rejects rent controls

Premier Jim Prentice is rejecting calls for rent controls as unnecessary and ultimately harmful, saying he’s looking for a market-based solution to deal with Alberta’s affordable housing crisis. But Mayor Naheed Nenshi said that while rent control may not be the answer, the province needs to step up with a new injection of money for social housing and incentives for rental housing development.

But Mayor Naheed Nenshi said that while rent control may not be the answer, the province needs to step up with a new injection of money for social housing and incentives for rental housing development.

Calgary has the lowest vacancy rate and among the highest rental costs in the country.

Last week, the annual Vital Signs report showed a high percentage of the city’s homeless population is employed, with 40 per cent of the Calgary Drop-In Centre’s clientele having a job but no steady accommodation.

In a meeting with the Herald’s editorial board last week, Prentice said he knows that with Calgary’s economy and population both surging, many people are simply unable to find a place to live and “we need to be focused on that.”

The premier said his government will work with the mayors of both Edmonton and Calgary to find solutions, but dismissed the notion of applying rent controls, such as those in place in Ontario, Manitoba and British Columbia.

“I believe that the only real solution for this is the market,” said Prentice.

“We need to ensure that we have a functioning housing marketplace. I don’t see it as having rent controls. I see it as the private sector stepping up to meet the demands of consumers in the province.

“The issue is … to ensure that from a regulatory perspective they can bring on land supply, get it serviced, build houses, build other kinds of accommodation that can suit the market. I don’t think the artificiality of rent controls helps the free market function properly.”

The province currently requires three-months notice for a landlord to raise rent and only one increase is allowed in a 12-month period. However, there is no limit on how much rents can be hiked.

In an interview, Nenshi said he does not have a position on rent control, but maintained the PC government needs to consider its options.

He noted the traditional economics argument is that rent controls don’t work because they depress the supply of housing, “but the issue is, supply is depressed anyway.”

“I hear stories every single day of people who have to leave because their rent has gone up an exorbitant amount,” he added.

The Canada Mortgage and Housing Corp.’s market survey last April found Calgary and Edmonton’s residential vacancy rate was tied for the lowest in the country, at 1.4 per cent. The average rent for a two-bedroom apartment in Calgary was $1,267, trailing only Vancouver.

Nenshi said the housing system is “clogged” in Calgary.

High home prices prevent many renters from buying and a lack of rental accommodation keeps some residents in subsidized housing. That, in turn, leaves many homeless citizens who use the shelter system nowhere to go, he said.

“We really are getting close to hitting a breaking point here where it’s really going to hamper our economic growth and quality of life,” the mayor said.

Nenshi said part of the problem is the issue has fallen off the political agenda since former premier Ed Stelmach made a major push to tackle homelessness and affordable housing.

Between 2009 and 2012, the province spent more than $440 million on grants to build 11,000 affordable housing units provincewide, but funding ended in 2012.

Last year, the province spent just over $25 million on housing capital projects, with the bulk slated for seniors housing units.

The province has $137 million in capital funding earmarked for housing this year, but Nenshi said that is aimed primarily at refurbishing existing stock and building new seniors accommodation.

“We really, really need to make a pretty big financial investment at this point,” said the mayor.

“I would estimate in Calgary we are short about 5,000 affordable housing spaces and we’re lucky to get a couple hundred built a year. So we need a massive infusion here.”

The mayor said the government also needs to find ways to get the private sector involved in developing rental housing, since companies have far more incentive to build high-end properties.

NDP MLA Rachel Notley said that with major housing issues unfolding not only in Alberta’s two largest cities but also in communities such as Grand Prairie and Fort McMurray, the province must significantly increase its “stalled” affordable housing funding.

But she said it is also time for the government to implement a form of rent control, at least temporarily, with a cap on how much rent can be increased annually.

Notley said Friday in Calgary that Prentice’s suggestion that the market should be the primary means of dealing with Calgary’s housing issues was “profoundly irresponsible.”

“If we leave it to the market, there will end up being a market for tent space in this park,” she said while in downtown Calgary.

Liberal MLA David Swann said his party has no position on rent controls but a mixture of new funding and policy changes are needed to address the housing issue.

Swann said long-delayed city charters would give Calgary and Edmonton new powers to address the housing issue.

“I have seen and heard too many people in my office that are really struggling with anxiety and depression and children’s needs because it’s just difficult in this city,” he said.

“I am hearing more about housing than I’m hearing on any other complaint from residents.”

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